Sias to probe green claims by companies to protect investors

SINGAPORE - Investors' watchdog Securities Investors Association (Singapore) (Sias) will dig deeper into companies' green reports to ensure they are carrying out their sustainability practices as claimed.

This is to better protect investors against instances of greenwashing by companies, said Sias chief executive David Gerald in an opening address at the launch of Sias' corporate governance week on Monday.

Greenwashing is the process of businesses leading consumers or stakeholders into believing their practices, products or services are more environmentally positive than they actually are.

Sias will review all listed companies' sustainability reports and disclosures and ask them more questions in a bid to make them more accountable.

Company shareholders can access these questions on the Sias website.

The watchdog is also planning to organise more investor education programmes to teach investors the importance of sustainability and how to question companies on their annual reports and sustainability reports.

"The greenwashing of environmental, social and governance (ESG) investment products is now an issue of concern and various organisations, including Sias, are working on disclosure standards to combat it," said Mr Gerald.

The various initiatives by Singapore regulators are a key step forward, given the prevalence of greenwashing in the finance sector.

"However, as Singapore investors increasingly demand more ESG investment products, there is also a fear that the needs of investors will not be met, and their interests may not be protected," said Mr Gerald.

But implementing a sustainability strategy is not without its challenges, he added.

One of the challenges include getting businesses and investors to agree on their views towards sustainability, such as how meaningful sustainability efforts may take a longer time to bear fruit.

Another challenge is inequality, said Mr Gerald.

"The issue of inequality, though long-standing, has been exacerbated on many fronts... income inequality between citizens and countries - while an issue by itself - is further complicated by other forms of inequalities, such as the unequal distribution of vaccines worldwide, and the asymmetrical social pressures placed on mothers working from home," he said.

In June, Deputy Prime Minister Heng Swee Keat highlighted that greenwashing is becoming the bane of global financial systems.

If not tackled well, an erosion of confidence in ESG products can affect financial stability, he added.

Major companies have come under scrutiny too, said Mr Gerald.

Fashion retailer H&M and sporting goods chain Decathlon were required to remove sustainability-related labels from their products and websites, following an investigation by the Dutch regulator. They also made donations to sustainable projects to compensate for their inadequate disclosures.

"Companies should be aware of the pressure posed by both shareholders and stakeholders regarding sustainability practices," said Mr Gerald.